Why Yahoo shares are jumping on Alibaba market debut

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Harriet Green

I am City A.M.'s deputy business features editor. I look after the Entrepreneurs page, Alternative Finance and our Office Politics section. I also help out with the Forum, running our daily debate. I have a special interest in distributed ledger technology. Prior to working at City A.M., I ran a social enterprise.

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Harriet Green

Investors are proving just how excited they are about the news that Alibaba, the Chinese e-commerce giant, is heading for a market debut.

Yahoo shares rose over four per cent at the opening bell, and leapt almost six per cent in pre-market trading today.

That’s no surprise: Yahoo owns a 24 per cent stake in Alibaba. The latter is set to be worth $150bn, making Yahoo's stake worth around $36bn. That means Yahoo's stake accounts for around 90 per cent of its value - its market cap is $40bn.

Alibaba confirmed yesterday that it’ll list on the New York Stock exchange later this year.

Yahoo’s stake in the company now looks like something of a timely boost: investors are yet to be completely convinced of the former's growth trajectory, but news of the flotation will likely continue to bolster its share price.